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“Davidson” submits:

Establishment Survey rises 253,000, Household Survey rises 139,000. Some describe these reports as  “Hot employment demand” and are disappointed on inflation expectations while others point to the decline in Job Openings as indicative of pending recession viewed as a positive. This thinking misses many economic fundamentals.

Economic growth has long been deemed inflationary. In my analysis it is not. Economic growth proves deflationary long-term as it brings innovation into the equation which lowers the costs to standards of living. Said another way, innovation is driven by consumer spending and is always faster, higher quality and/or cheaper than prior solutions and net/net deflationary. Economic growth speeds the implementation of innovation. This is the ultimate driver of the business cycle. Government spending on the other hand expands currency without enhancing innovation and coupled with government regulation has always proved inflationary. The investor focus that higher rates will slow employment and reduce inflation caused by government is a significant misperception.

These reports indicate continued core economic growth. Light Weight Vehicle Sales data was revised higher and even with the volatility a clear uptrend is emerging. More people working increases the demand for personal transportation. Likewise, Job Opening data has declined and now returned to the pre-COVID trend line(dashed line). Temp Help is lower as probationary hires are absorbed into the full time ranks. There is much to like in this data.

“Total nonfarm payroll employment increased by 253,000* in April, compared with the average monthly gain of 290,000 over the prior 6 months. In April, employment continued to trend up in professional and business services, health care, leisure and hospitality, and social assistance.

In April, employment continued to trend up in professional and business services  (+43,000). Over the prior 6 months, the average monthly gain in the industry was 25,000. In April, professional, scientific, and technical services added 45,000  jobs.

Employment in temporary help services continued to trend down over the month  (-23,000) and is down by 174,000 since its peak in March 2022.

Employment in health care increased by 40,000 in April, compared with the average  monthly gain of 47,000 over the prior 6 months. Over the month, employment continued to trend up in ambulatory health care services (+24,000), nursing and residential care facilities (+9,000), and hospitals (+7,000).

Employment in leisure and hospitality continued to trend up in April (+31,000), largely in food services and drinking places (+25,000). Leisure and hospitality had added an average of 73,000 jobs per month over the prior 6 months. Employment in this industry remains below its pre-pandemic February 2020 level by 402,000, or 2.4 percent.”

*(2mo revision lower 149,000.)

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